Crypto mixing services are primarily used for privacy purposes rather than illicit activities, according to Chainalysis.
Stolen funds represent only 8.1% of all funds sent to cryptocurrency mixers, according to New York-based blockchain analytics firm Chainalysis.
Primary use for privacy reasons
According to a recent Chainalysis webinar, the majority of funds sent to cryptocurrency mixing services or tumblers comes from exchanges, which indicates that such funds are primarily used for privacy purposes rather than for illicit activities.
Conducted on Aug. 14, the webinar called “Cryptocurrency Typologies: What You Should Know About Who’s Who on the Blockchains” covers a large number of risk typologies in crypto industry, including darknet markets, terrorist financing, sanctioned cryptocurrency addresses, stolen funds, scams and others.
Still the main destination for stolen crypto
In the webinar presentation, Chainalysis described a crypto mixer as websites or software for obfuscating the source of funds, which does not require any Know Your Customer procedures, exists both on clearnet and darknet and is typically centrally controlled.
Identifying mixers as a high risk typology, Chainalysis claims that as much as 40% of all funds on crypto tumblers originates from crypto exchanges, while only 2.7% is sent from darknet market.
A significant fraction of funds on crypto mixers is represented by those that come from other mixing services, which is purportedly believed by people to add an extra layer of obfuscation, Chainalysis’ senior product manager of data Hanna Curtis explained.
While stolen coins represent roughly 8% of funds going through crypto mixers, these anonymizing services are still the primary destination of cryptocurrencies after they get stolen, Curtis stated.
Funds’ origin on crypto mixers. Source: Chainalysis
Additionally, Chainalysis noted a surging popularity of decentralized mixer protocols as opposed to centralized ones due to the existing vulnerability to law enforcement authorities.
According to the firm, Wasabi Wallet has mixed a total of $250 million in Bitcoin (BTC) so far in 2019, seeing a significant rise in volume since January.
In comparison, major centralized crypto tumbler Bestmixer, which was shut down by Europol in May 2019, mixed $200 million over a twelve-month period, according to Chainalysis.
Recently, Luxembourg-based crypto capital flow firm Clain published a research claiming that at least 4,836 Bitcoin of stolen from Binance exchange in May 2019 was laundered through crypto mixing service Chipmixer.